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Monday, Aug 15, 2022

Vet Private Equity Investor Takes Shot at Pro Sports

Private equity investor Larry Berg, 51, serves as lead managing owner of Los Angeles Football Club. He was already a passive minority investor in the team when he stepped into the operational role
last year after Major League Soccer expressed an interest in seeing more local control of LAFC. Berg, a senior partner at Century City-based Apollo Global Management and former Drexel Burnham Lambert executive, spoke to the Business Journal about the opportunities associated with starting a professional sports franchise in Los Angeles. Berg recently engaged in a Q&A session
with the Business Journal’s David Nusbaum, and edited excerpts of the conversation follow:

Why did you become involved with LAFC?

I’m a big U.S. national team fan and I have some other investments in other teams. I was interested because MLS is growing. I was interested because it was in my hometown, which was a big deal. I love soccer, but I also love Los Angeles.

What did you learn from Chivas USA’s failure?

I actually thought Chivas USA would work. I was as surprised as anybody that it didn’t. One clear lesson is that we are reaching out to the entire community. L.A. is a very diverse population. We want to have as wide of a following as possible.

(Editor’s note: Chivas USA was an MLS franchise and an affiliate of a professional club in Mexico. Chivas USA played in Carson between 2004 and 2014.)

Did you know any of the 26 other co-owners before getting involved?

I brought in Will Ferrell, who is a friend and a big soccer fan. When all is said and done, you know some of the people, you don’t know some of the people, and it’s been a process of meeting many people for the first time. From what I’ve seen, we’ve had all of the benefits and none of the negatives.

How do you all work together?

We have three controlling owners and some very large minority investors. That makes up our board. We have investors who are not as large, like (former U.S. women’s national team star) Mia Hamm, who make up an advisory board. They meet several times a year. They have transparency and access. There are others who probably have smaller investments and are on call. We’re not shy. We reach out and tap their expertise when needed.

What has been the biggest surprise so far?

The passion of the supporters even before we had a coach and a team has been a very pleasant surprise. On the negative side, we are a startup. The time requirements are a little greater than I anticipated. Doing everything from building a stadium, to signing up a coach, recruiting players, looking for sponsors. It is absolutely busier than if you buy a pre-existing team.

How many potential stadium sites did you consider?

MLS had identified the Exposition Park location and had done some work on it. It was up to the new ownership team to move forward with that or not. We looked at a lot of other places. Exposition Park stood out on so many fronts. The train lets off there from Santa Monica. You have all the other museums with the George Lucas museum coming. That was one thing that made me want to step up into the new role. The heavy lifting had already been done.

What makes an MLS franchise a sound financial investment?

U.S. soccer is growing, the sponsorship dollars are growing, the ratings will get better as we move toward the next World Cup. (The U.S. men’s soccer team needs) to do well in 2022 when we renew our TV deal (see related story, page 14). It’s a long-term investment and I feel confident that we will do well.

Does your private equity experience translate to sports ownership?

The skill sets that you learn in private equity translate to something like this. At the end of the day, the most important skill is the ability to ask good questions. There’s a business side of the equation and an on-the-field side of the equation. I’m more value added on the business side of the equation.

Is it important from a business perspective to build a rivalry with the LA Galaxy?

It needs to happen naturally and it needs to be authentic. The fans are engaged on social media and other ways – there’s clearly a rivalry developing. I think it will happen very quickly and should be the best rivalry in the league (see related Commentary, page 38).

Will the team focus more on developing young players or signing big-name stars?

You have to do both. The marketplace expects us to hire some big players. The MLS academy system has come a long way. As an expansion team, we’re at a bit of a disadvantage because it takes time to build your academy and have players graduate to the first team, but it is absolutely part of what you do to do well.

Los Angeles is a crowded sports market. Does that concern you?

It’s a crowded market, but I’m not sure how much crossover there is. There’s an enormous number of soccer fans in the area. The soccer fan is in many ways different demographically and interestwise. We’re not necessarily trying to take market share away from those teams.


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